Business leaders have urged the Government to do more to help companies create jobs by creating a more "pro-employment landscape".

The CBI said extending the qualifying period for unfair dismissal claims from one year to two, which comes into force on Friday, was the only concrete step ministers had taken to encourage job creation.

Business Secretary Vince Cable said the change would make it easier to hire staff and was part of a "radical" reform package that will save businesses more than £10 million a year.

"For too long now the system in place for employment tribunals has been a bloated and bureaucratic obstacle for employers and the taxpayer. For employers they were finding that weak and vexatious cases were too much of the norm, too easy to bring forward, while for the taxpayer they were proving ever more expensive to run.

"We have seen claims drop in the last year and we want to see this continue as we introduce alternative measures in the coming months helping both parties resolve workplace disputes," said Mr Cable.

Dr Neil Bentley, deputy director general of the CBI, said: "Extending the qualifying period for unfair dismissal will give employers, especially smaller ones, confidence to take on more staff. It will be a particular boon for young people and those who've been out of work, as it will give them longer to demonstrate their value to employers.

"But this is the only concrete step that the Government has taken to encourage job creation so far. As we approach the halfway point in this Parliament, we've heard plenty of talk, but seen little action. Employers want to see the Government doing more to create a pro-employment landscape."

The TUC warned that around 2.7 million workers faced an increased risk of losing their jobs, saying that the change in the law would also increase job insecurity, discriminate against younger workers, part-time women workers and employees from black and ethnic communities, and encourage more of a hire and fire culture.

General Secretary Brendan Barber said: "Cutting back on protection against unfair dismissal will do nothing to boost the economy.

"If people are constantly in fear of losing their jobs it will lead to even less consumer spending, and losing your job is one of the worst things that can happen to anyone, especially when unemployment is so high."